The International Monetary Fund has slashed its global economic outlook amid a “highly unpredictable environment” created by US President Donald Trump’s tariffs.

The IMF global economic growth has been revised down from 3.3 per cent to 2.8 per cent this year — and the US could be the worst hit.

Australia’s growth outlook has also taken a severe cut, with annual output forecast to be $13 billion lower in 2025.

Australia’s economic growth projection for 2025 was downgraded to 1.6 per cent from 2.1 per cent in January — a 0.5 percentage point trim.

In a dire assessment, the IMF said global uncertainties had “climbed to new highs” as a result of Trump’s upheaval of tariffs to levels “not seen in a century”.

The forecast was released in the IMF’s  World Economic Outlook for April on Wednesday (AEST).

The US was given the biggest downgrade, with growth dropping from a previous estimate of 2.7 per cent to 1.8% this year.

“Major policy shifts are resetting the global trade system and giving rise to uncertainty that is once again testing the resilience of the global economy,” the IMF said in the document.

IMF chief economist Pierre-Olivier Gourinchas said the global economy was “being severely tested once again”.

He said a major factor behind the growth downgrades was uncertainty created by Trump’s tariffs and other countries’ counter-tariffs.

“Faced with increased uncertainty… many firms’ initial reaction will be to pause, reduce investment and cut purchases.”

Despite an equity markets suffering a correction since Trump’s tariff announcement on April 2, US stocks potentially had further to fall, given price-to-earnings ratios remain at historical highs, the IMF said.

Tariffs will dominate meetings between global financial leaders gathering at the IMF and World Bank meetings in Washington this week.

Finance ministers from around the globe will be eagerly seeking meetings with Trump’s lead tariffs negotiator, Treasury Secretary Scott Bessent, to strike a tariff exemption deal.

But a notable absentee will be Australia’s Treasurer Jim Chalmers, who is tied up campaigning for the federal election.

Chalmers said Australians would be worse off and more vulnerable to global economic uncertainty if Opposition Leader Peter Dutton won the election on May 3.

“At a time of extreme global uncertainty our responsible approach to economic management has never been more important,” Chalmers said.

“We’re not immune from the turmoil in the global economy but the progress we’ve made together puts us in good stead.”

Australian GDP growth is expected to pick up to 2.1 per cent in 2026, from 2.2 per cent projected in January.

Inflation is projected to come in 0.8 percentage points lower this year than previously forecast, at 2.5 per cent, before accelerating strongly to 3.5 per cent in 2026.

In its Global Financial Stability Report, also released on Wednesday, the IMF warned stretched asset valuations and highly leveraged financial markets could amplify shocks and exacerbate economic downturns.

Financial authorities should be ready to intervene to address severe liquidity or market function stress, the IMF cautioned.

-with AAP